2014 Employee Engagement in Organisational Restructuring Process

How does Organizational Restructuring impact one
employee engagement for existing employees and
those exiting the firm?
Friday, March 14, 2014 Janel P. Phillip

2© 2014 Janel P. Phillip. All Rights Reserved
RESTRUCTURING OR DOWNSIZING
A restructuring or downsizing strategy reduces
the scale (size) and scope of a business to
improve its financial performance.

REASONS FOR DOWNSIZING
 Global Recession or Downturn
 Local competition or loss of market
 Technology enhancements
 Outsourcing
 Merger or acquisition
 Changing organizational culture
 Lack of funding
 Different competencies
 Global competition
 Multi-skilling

MOTIVATORS FOR DOWNSIZING
 Why do firms downsize?
 Reduce costs and increase revenue
 Reduce layers of management to increase decision
making speed and get closer to the customer
 Sharpen focus on core competencies of the firm, and
outsource peripheral activities
 Generate positive reactions from shareholders in order
to improve valuation of stock price
 Increase productivity

WHAT IS A REDUNDANCY?
 Termination must be wholly or mainly attributable to the
employer:
Ceasing or intending to cease to carry on the business for
the purposes of which the employee was employed by it
(business closure)
Ceasing or intending to cease to carry on that business in
the place where the employee was so employed (workplace
closure); or
Having a reduced requirement for employees to carry out
work of a particular kind or to carry out work of a particular
kind at the place where the employee was employed to work
(headcount reduction)

EXAMPLES OF REDUNDANCY
 Reallocation of duties
 Re-organisation leading to a reduced need for
employees
 Plant/Office Closure due to reduced business need or
financial loss

ALTERNATIVES TO REDUNDANCY
 Freeze recruitment
 Reduce/eliminate overtime
 Consider offering voluntary redundancy
 Variation
 Temporary pay freeze
 Reduction in hours/unpaid holiday
 Reduction in pay/removal of benefits

VARYING A STAFF CONTRACT
 By informed and express consent
 By express variation clause but any unreasonable
change may constitute a breach of trust and confidence
 By serving notice and offering a new contract following
consultation (with union)
 By Transferring employees where vacancies exist
elsewhere in the business

SEPARATION AND SEVERANCE
 What to consider:
 Consideration of employees (“Separated” and “Survivors”)
 Compliance with law and union agreements (See Retrenchment and
Severance Benefits Act – Act 32 of 1985)
 Protecting morale and commitment (Engagement)
 Ensuring Enablement, Talent and Business Continuity
 Corporate values
 Avoiding lawsuits and “St. Vincent Street”
 Protecting brand
 Budget
 Return on investment

SEPARATION AND SEVERANCE
 What to consider:
 Which positions to “severe”
 What to offer - Severance or VTEP/VSEP
 How severance formulae are determined
 Benefits provided after separation (enhanced VSEP)
 When to offer (timing affects productivity)
 Which employees to offer VTEP/VSEP
 Which employees get what level of severance, including global differences
 Minimum and maximum caps for severance pay-outs, including global differences
 Pay-out methods, including global differences
 Circumstances in which severance amounts are increased, including global
differences

ADVERSE EFFECTS OF RESTRUCTURING
 Total shut down of business (union action or due to decrease in morale)
 Increase in absenteeism and presenteeism
 Reduction in job motivation
 Reduced organizational commitment and employee engagement
 Post Survivor Syndrome
 Risk avoidance
 Loss of key skills and talents
 Reduced speed of decision making
 Decrease in productivity
 Increased level of workplace stress
 Greater micromanaging

EMPLOYEE SYMPTOMS (Announcement of Restructuring)
 Fear, Anxiety, insecurity and
uncertainty
 Frustration, anger and
resentment
 Negative feelings of unfairness,
betrayal and mistrust
 Slow Down/Low Productivity
 Depression
 Safety incidences
 Physical illness
 Poor Performance - Detachment

SURVIVOR SYMPTOMS
 Fear, insecurity and uncertainty
resentment
 Required to do more with less
 Lack of Job Mobility
 Mourning for old organisation
and friends
 Illness

SEPARATED SYMPTOMS
 Fear, insecurity and uncertainty
resentment
 Mourning for old organisation
and friends
 Illness

“When trust is low, people focus their energy
on their own protection and survival…”
“Without trust, organizational goals
will literally fall on deaf ears.”
“High trust companies have high productivity and
greater stock market returns than low trust
companies…”
15

ORGANIZATIONS’ BIGGEST CONCERNS:
TOP THEMES
1. Retaining top talent / critical skills
2. Maintaining / affording competitive pay
3. Maintaining employee engagement / motivation
4. Career development / training
5. Recruiting top talent / critical skills

CASE STUDY - POWERGEN
1. 2008 Organisational Review and Restructuring started
2. 2008 – 2009 Organisational Review and Analysis
3. 2009 – 2011 PRP Freeze
4. 2008- 2014 Head Count Freeze
5. 2010 VTEP Offer to Prof/Senior Management
6. 2010 Implement Business Execution Software to retool
Performance Management System
7. 2011 & 2013 Organisation Review & Engagement Survey
8. 2012 Leadership Development Programme
9. 2012 – 2014 Management and Supervisory Development
10. 2014 – 2016 VTEP Offer
11. 2015 – 2016 Survivor Transitions and Outplacement
12. 2014 – 2017 Reskilling
13. 2014 – 2017 Building new work teams
14. 2015 & 2017 Organization Review & Engagement Survey
15. Major Budget Cuts and austerity measures
1. New contract terms
with Customer - PPA
2. Potential Loss of
Revenue
3. Loss of Market Share
4. New Competitors
5. Financial Loss

Employee Engagement (motivation) encompasses three factors:
 The degree of psychological or emotional commitment an employee
has to the organization
 An employee’s willingness to expend discretionary effort on behalf of
the organization – go above and beyond formal job requirements
 An intention to remain with the organization
Employee Enablement focuses on the concept of providing
employees with:
 the ABILITY to successfully accomplish their jobs. In other words, an
employee’s motivation must match with a work environment that
allows them to channel their extra efforts productively

THE FACTORS MEASURED IN THIS SURVEY 2008
 STRATEGIC DIRECTION
 CUSTOMER FOCUS
 LEADERSHIP & MANAGEMENT
 MANAGEMENT/EMPLOYEE RELATIONS
 HUMAN RESOURCE MANAGEMENT
 SUPERVISION
 COMMUNICATION
 WORK ORGANIZATION
 CORPORATE SOCIAL RESPONSIBILITY
 EMPLOYEE ENGAGEMENT (new to EBS2008)

PEOPLE SATISFACTION INDEX 2008
35% 25% 40%
48% 24% 28%
0% 25% 50% 75% 100%
EBS2006
EBS2008
Satisfied Neutral Dissatisfied
Overall Employee Satisfaction increased 13% above the EBS2006 survey and
dissatisfaction decreased 12%.

EMPLOYEE ENGAGEMENT 2008
26% - 50% 25% & Below75% & Over 51% - 74% EBS2006EBS2008 Satisfied
60%
37%
46%
46%
47%
50%
58%
67%
0% 25% 50% 75% 100%
My company inspires me to do my best at work everyday.*
I would recommend my company to relatives and friends
as a great place to work. *
Even if I were offered another job with similar pay and
benefits, I would still remain with the company.*
I am not thinking of leaving this company any time soon. *
Most of the time, I feel motivated to "go the extra mile" for
my company. *
Overall, I am generally satisfied working with this
company.
I am proud to tell people where I work. *

WHAT THE SURVEY MEASURED 2012
 EMPLOYEE ENGAGEMENT
 CUSTOMER FOCUS
 LEADERSHIP
 MANAGEMENT/EMPLOYEE RELATIONS
 PEOPLE MANAGEMENT PRACTICES
 SUPERVISION
 COMMUNICATION
 WORK ORGANIZATION
 CORPORATE SOCIAL RESPONSIBILITY
 CHANGE MANAGEMENT
 HEALTH, SAFETY & ENVIRONMENT

2011 EMPLOYEE SATISFACTION INDEX
39% 24% 37% 1%
0% 25% 50% 75% 100%
POWERGEN
EMPLOYEE
SATISFACTION
INDEX
Favourable Neutral Unfavourable No Answer
EBS index 2006: 35%
EBS index 2008: 48%

2011 CATEGORY RESULTS
Minor Weakness Major WeaknessMajor Strength Minor Strength Unfavourable No AnswerNeutral
14%
21%
25%
26%
28%
45%
47%
48%
53%
56%
62%
23%
22%
21%
28%
23%
30%
26%
22%
21%
22%
25%
62%
56%
53%
45%
49%
23%
26%
30%
25%
21%
13%
1%
1%
1%
1%
0%
2%
1%
1%
1%
1%
0%
0% 25% 50% 75% 100%
LEADERSHIP
COMMUNICATION
PEOPLE MANAGEMENT PRACTICES
WORK ORGANIZATION
MANAGEMENT/ EMPLOYEE RELATIONS
CUSTOMER FOCUS
CHANGE MANAGEMENT
EMPLOYEE ENGAGEMENT
SUPERVISION
HSE
CORPORATE SOCIAL RESPONSIBILITY

2013 EMPLOYEE SATISFACTION INDEX
25
40%
48%
23%
22%
37%
29%
1%
1%
0% 25% 50% 75% 100%
POWERGEN EOS2011
EMPLOYEE
SATISFACTION INDEX
POWERGEN EOS2013
EMPLOYEE
SATISFACTION INDEX
Satisfied Neutral Dissatisfied No Answer

2013 CATEGORY RESULTS
26
25%
30%
22%
32%
22%
37%
26%
38%
30%
39%
49%
47%
48%
61%
61%
73%
79%
76%
23%
27%
28%
21%
24%
28%
20%
21%
28%
24%
20%
24%
22%
20%
26%
15%
12%
17%
51%
44%
50%
45%
54%
34%
53%
41%
40%
37%
30%
30%
30%
19%
13%
10%
9%
5%
0%
0%
0%
2%
1%
1%
1%
0%
1%
0%
1%
0%
1%
0%
0%
3%
1%
2%
0% 25% 50% 75% 100%
2011
MGMT EMPLOYEE RELATIONS - 2013
2011
LEADERSHIP - 2013
2011
COMMUNICATION - 2013
2011
PEOPLE MGMT PRACTICES - 2013
2011
WORK ORGANIZATION - 2013
2011
SUPERVISION - 2013
2011
EMPLOYEE ENGAGEMENT - 2013
2011
CSR - 2013
2011
HSE - 2013
EOS2013 Satisfied Scores: 75% & Over (Major Strength)
51% - 74% (Minor Strength)
26% - 50% (Minor Weakness)
25% & Below (Major Weakness)
EOS2011 Satisfied Scores Neutral Dissatisfied No Answer

0
10
20
30
40
50
60
2006 2008 2011 2013
Engagement Index
Engagement Index

ENGAGEMENT IS CRITICAL IN A RESTRUCTURING
EXERCISE…
BusinessResults
Engagement
StrategicIntent
Employee
Effectiveness
The discretionary effort of employees is essential for
organizations trying to do more with less

. . . but you also need to enable employee
performance
BusinessResults
Enablement
Engagement
Employee
Effectiveness
StrategicIntentIn tough times, work environments have to turn
motivation into productivity

EMPLOYEE EFFECTIVENESS: CONCEPTUAL
MODEL
Engagement AND Enablement are both essential for optimum
performance

 Clear & promising direction
 Confidence in leaders
 Quality & customer focus
 Respect & recognition
 Development opportunities
 Pay & benefits
• Performance management
• Authority & empowerment
• Resources
• Training
• Collaboration
• Work, structure, & process
Drivers Employee
Effectiveness
Employee
Effectiveness



Productivity
Financial performance
Customer loyalty
Innovation
Enhanced corporate
reputation
Attraction and retention
of talent
Engagement
• Commitment
• Discretionary effort
Engagement
• Commitment
• Discretionary effort
Enablement
• Optimized roles
• Supportive environment
Enablement
• Optimized roles
• Supportive environment


ROLE OF HUMAN RESOURCES
 Consult. Review the law, talk to the union and all key stakeholders.
 KEEP Eyes on the eye of a ORG RENEWAL hurricane. Focus and
action, retention issues can be expected to surface when labor markets
strengthen.
 Your best people always have options. Your top performers work for
you because they want to, not because they have to. Treat them like
volunteers regardless of market conditions.
 Your employees are always watching. Character is revealed in tough
times. Organizations that continue to put people first in a downturn will
win loyalty for the future.
 Communicate well both ways. Keep employees, management and
shareholders in a calm state and exude confidence. Keep a reflective
journal.

RECOMMENDATIONS
 Recognize that employee engagement and enablement are significant
business concerns.
 Undertake strategic workforce reviews to determine where
engagement and enablement may be particularly critical and/or
lacking.
 Monitor enablement levels on an ongoing basis to give employees a
voice.
 Address engagement and enablement issues in managerial
development programs.
 Identify organizational programs and initiatives out of alignment with
key engagement and enablement drivers.

The firm will emerge from
downturn a changed
organization – for better or
worse!

THANK
YOU

2014 Employee Engagement in Organisational Restructuring Process

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